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Specialist Employment Law Solicitors in Abingdon
For Oxford, Oxfordshire, Berkshire, London & the Thames Valley

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Employers' employment law updates

We produce a periodic e-newsletter for employers aimed at giving you pragmatic and relevant updates and information.


Tax and Termination Payments Pitfalls

Most employers and employees know that there is a basic rule allowing payments of up to £30,000 tax free to departing employees on termination of employment. (There is a misconception still floating around that the reason for the end of employment must be redundancy to get the tax break, but this is not correct.)

However, there are a number of circumstances in which termination payments are taxable even if they are less than £30,000:

  • Perhaps the most obvious is when the payment is in lieu of notice. Such payments are now called ‘Post Employment Notice Pay’. These come into play when the employment ends without the employee remaining employed for their notice period. Or the employee may work out part of their notice and be due a payment for the rest of it. Payments in lieu of notice are fully taxable. The employer needs to accurately calculate the amount of the notice payment due. If it is under calculated, more tax may be left owing from any further ex gratia payment.

  • Payments made on the retirement of the employee are fully taxable. HMRC has a guide on what it views as ‘retirement’ here. Employers may be surprised at some of the examples which are viewed as retirement, making the termination payment fully taxable:

    A long-service employee leaves to take a senior executive position in another company at the age of 60.

    A division of the company is sold and the 55 year old manager responsible for running it leaves to take a job with the purchaser.

    What these examples make clear is that there is a risk HMRC will see the reason for leaving of any employee of say 50 or above as being a retirement. It is possible to get advance clearance from HMRC to make the payment tax free.

  • Any payment which is made in return for the employee doing something will be taxable. For example, the employee may agree to sign up to new post termination non-compete restrictions; or the employee may agree to do a handover or complete various tasks before leaving. If the agreement contains anything like this, the business should apportion part of the termination payment to it and tax this part fully.

    Employment Law Plus gives practical advice on termination of employment and settlement agreements.

    Posted June 2022

  • The flexible working environment

    Many employers are now struggling with the issue of getting employees back into the workplace. WFH or hybrid at home and at office working looks set to continue in many workplaces. Either the business has found the model can work or accommodations need to be made for employees to retain them.

    Businesses need to ensure they have given proper thought to WFH arrangements and put in place relevant contract terms and WFH policies. WFH raises particular challenges in terms of data protection and health and safety. You can find guidance on WFH on the website of the National Cyber Security Centre and the Information Commissioner. It also presents more risk of potential competitive activity by employees. Managing a remote workforce clearly needs careful consideration. There is a risk that employees who need to WFH for childcare or for disability issues will lose out on pay increases and promotions.
    Employers should not just let hybrid working develop on a ad hoc basis but carefully think through the implications and put proper structures in place. A good starting point is our template Working From Home Policy which is available for a low fixed fee.
    Where employees are needed back in the workplace, their legal options for insisting on home working have greatly diminished with the vaccine roll out. It seems unlikely now that most employees can reasonably believe that there would be a serious and imminent from being in the workplace, where the employer has complied with government health and safety guidance. However, there will be employees who have a medical condition amounting to a disability where WFH or hybrid working may be a reasonable adjustment for their condition.

    In theory, flexible working cuts both ways with employers perhaps seeking more flexibility from employees. However, this can lead to discrimination issue, as recently highlighted in the appeal tribunal case of Dobson v North Cumbria Integrated Care NHS Foundation Trust. The Trust introduced a requirement that community nurses work flexibly, including at weekends. Ms Dobson could not do this because of her responsibilities caring for three children. She was dismissed and claimed unfair dismissal and indirect sex discrimination. The appeal tribunal found that the employment tribunal should have used its general knowledge to conclude that women, because of their childcare responsibilities, are less likely to be able to accommodate certain working patterns than men. This would make the flexible working requirement indirectly discriminatory.

    All employees with 26 weeks service have the right to ask for a flexible working arrangement now, although there are many ways around the request for employers who do not consider this will meet their business needs. The Government is currently consulting on changes to the law on flexible working requests, including the right to ask for flexible working from day 1 of employment.

    Posted 8 October 2021

    Fire and rehire

    Pressures of COVID have led to a wave of ‘fire and rehire’ which has attracted a lot of media attention. This is where employers force through contract changes by dismissing employees and offering re-engagement on less favourable terms; or where the prospect of dismissal is put to workers during negotiations about changing their terms and conditions. The practice may increase when the furlough support measures come to an end in September or if the economy is slow to recover

    The Government asked ACAS to report on the issue and it was published in June. ACAS summed up their findings as: ‘Some of the participants told us about the business challenges of COVID-19 and how the use of fire and rehire can help reduce redundancies. Others believe that the practice is unacceptable, and that the pandemic has been used as a 'smokescreen' to diminish workers' terms and conditions. There was also evidence that fire and rehire practices have been used for many years and predate the pandemic.’

    Of course, fire and rehire is a classic way of changing terms and conditions when agreement cannot be reached. The keys to doing it without liability for unfair dismissal are for the employer to have sound business reasons for the changes and to consult fully with the affected employees. If more than 19 employees are at risk of being dismissed, the employer will also have to go through collective consultation with employee representatives for a minimum period of time prior to the first dismissal. The employer will be obliged to give contractual notice of any dismissal or, if the employee agrees to the changes, wait out the notice period until the changes take effect, unless the employee has agreed to an earlier contract change.

    In some circumstances, employers may see the risks of a fast fire and rehire strategy, which skips the consultation, as an attractive commercial solution to urgent business needs. It may consider that the risks of unfair dismissal claims and claims for a failure to collectively consult are low, particularly if most affected employees have less than 2 years service or a lack of alternative employment opportunities - meaning that most employees will accept the contract changes and work on. Where redundancies are the alternative, the employer may feel that avoiding redundancy costs and retaining an experienced workforce outweigh the risks of potential claims.

    The situation is more complex where employers want to change terms and conditions in the context of a TUPE transfer or where there is a recognised trade union. Legal advice is even more important in those scenarios.

    The kind of situations in which fire and rehire has been used during COVID include:

  • Avoiding redundancies by making changes to remaining staff contracts

  • Introducing temporary or permanent flexibility into contracts in terms of working hours, shift patterns, payment entitlements and security of hours

  • Breaking continuity of employment to stop employees gaining the protection of two years’ service, at which point they have the right to bring unfair dismissal claims

    While not recommending any of them, ACAS sets out various options for addressing hire and fire ranging from strengthening unfair dismissal protections to naming and shaming employers who adopt it. However, its summary concludes: ‘We will take up the government's request to produce further guidance that encourages good workplace practices when negotiating changes to staff contracts’. This seems to indicate that there will be no legal change, but just advice published.

    The ACAS report can be accessed here.

    Employment Law Plus provides detailed guidance to employers on the process of implementing contract changes and, if required, collective consultation, and advises employees who are caught in this situation.

    Posted July 2021

  • Can employers penalise workers for refusing to have a Covid vaccination?

    The headline in my paper read ‘Firms can legally demand staff are jabbed’. How true is this?

    Employers may be keen to ensure that all their workers returning to the workplace are vaccinated to help them fulfil their legal obligation to provide a safe workplace. It has been reported in the press that government sources are saying that companies who insist their workers are vaccinated would be protected by health and safety law relating to a safe place of work. The Health and Safety at Work Act 1974 obliges employers to take reasonable steps to reduce any workplace risks. Could it justify employers insisting staff are vaccinated? As with so much else COVID related, we are in novel territory, but here are some thoughts.

    Employers could certainly not physically insist that employees are vaccinated. But, in theory, they could penalise them for failing to be vaccinated. These theoretical penalties could range from the draconian dismissal to not allowing an employee to return to work or insisting they change their job duties to one which brings them into less contact with others. But what risks of legal claims would such an approach bring?

    If an employee with a minimum of two years’ service were dismissed for failing to have the vaccine, there would have to be compelling business circumstances to avoid a complaint of unfair dismissal, such as protecting vulnerable clients in a care home. Even then, the employer would need to be able to show that it had properly balanced its vaccination requirement against the employee’s human rights. This would involve looking at factors such as: What does the vaccine do? – Does it reduce transmission or does it simply suppress symptoms in a carrier? Are there any other less invasive steps that could be taken to reduce risk?

    The employee would be likely to say that there are other health and safety measures which the employer could take to provide adequate protection to colleagues and clients, and so dismissal is not justified IE the measures which employers have been adopting in the pre-vaccine world. They may also say that there are alternatives to dismissal to consider such as furlough. If the employee is able to work from home, it would be even harder for an employer to argue that vaccination was required.

    A clause requiring vaccination could be included in a contract of employment for new recruits. Employers still could not physically enforce this. But the contract could say that the employment would not start unless the employee produced a vaccination certificate or that it would be terminated unless the employee produced one within say 6 months. Because the employee would not have unfair dismissal protection at such an early stage in their employment, the organisation could dismiss without the unfair dismissal risk. But it would need to take account of potential discrimination claims as discussed below. Along the same lines, employers could, in theory, introduce a ‘be vaccinated or be dismissed’ rule for employees with less than two years’ service.

    Disciplining or penalising an employee with two years’ service for failing to be vaccinated might lead to a claim of unfair constructive dismissal where the employee resigns and says the employer has fundamentally breached their contract of employment. As explained above, the employer would find itself justifying the vaccination requirement.

    If an employer says that an employee cannot attend work and will not be paid until they are vaccinated, it will face liability for withholding wages. There is no minimum length of service requirement for this protection. Employees are entitled to be paid if they present themselves at work willing to do their duties. It would be exceptional for a contract of employment to give the employer the right to withhold wages when the employee is willing to work.

    There are various scenarios which could give rise to unlawful discrimination under the Equality Act:

  • Conspiracy theorist employees who refuse to have the vaccine are unlikely to be protected by religion and belief discrimination - conspiracy theories do not demonstrate the coherence and cohesion required to get over the bar of a protected belief. However, a belief that vaccines should not be used until they have had extensive trials over a long period may be a protected belief. Penalising such an employee for failing to be vaccinated may result in a religion and belief discrimination claim.

  • Some employees cannot be vaccinated for medical reasons. If the medical condition is long term and amounts to a disability under the Equality Act, it would be disability discrimination to penalise them because they did not have the vaccine.

  • Older workers are getting access to the vaccines earlier than younger ones. Preferential treatment of older vaccinated workers could expose employers to claims of age discrimination from their younger unvaccinated colleagues.

  • Pork gelatine has historically been used in some vaccines, which could lead to refusal on the grounds of religious belief for people of Muslim, Jewish or Hindu faith. Information on the ingredients of the current vaccines can be found on the manufacturer’s websites and patient information leaflets, while relevant religious groups have issued guidance on their view of the vaccines.

  • Those who are pregnant, breastfeeding or planning to get pregnant may consider that the vaccine could put them at a risk. Government advice currently published says that the vaccines have not yet been tested in pregnancy, so until more information is available, those who are pregnant should not routinely have this vaccine. Putting any pressure on an employee in this group to have the vaccine is likely to be discriminatory.

  • Any policy which requires the employer to know whether or not an employee has been vaccinated will have data protection implications. Vaccination status is information about health which is specially protected and needs more justification than standard data – all this would tie in with the question of whether penalising employees for not being vaccinated was appropriate for the business. The organisation would need to ensure that its staff privacy policy reflected the new measures. An impact assessment would be required covering such questions as whether it would be possible to achieve the business objective (a safe workplace/consumer product) in a less intrusive way (IE that does not involve holding data about vaccination), how the data would be held securely, who would have access to it, and exactly what information would be held etc.

    What is the position if an employee refuses to answer the question as to whether they have been vaccinated? Unless the employer has its data protection ducks in a row, the employee is likely to have good grounds for refusing. If the data protection angle is sorted, asking about vaccination is probably a reasonable management instruction which means, in theory, that employers could discipline employees who refuse to answer.

    Asking candidates during recruitment if they have had the vaccine also requires the requisite data protection measures to have been put in place. The Equality Act also kicks in here because it prohibits asking questions to candidates about health before making a job offer unless one of very specific circumstances apply. The most relevant one would be that the question is necessary to establish that the person can carry out a function that is intrinsic to the work. This limits the number of positions where asking about vaccination would be allowed.

    A more moderate approach being suggested is to inform employees of the benefits of being vaccinated and the positive impact that vaccination could have on the workplace. However, employers should protect themselves against any future concerns raised about the vaccines by keeping a copy of the government advice they are relying on in advocating vaccination. At the same time, they should also keep evidence of the efforts made to encourage vaccination to show they have been fulfilling health and safety duties. In this uncertain area, employers have a difficult balancing act. The government’s guidance changes, so employers should review vaccine advice regularly and, to protect themselves, keep a copy of the advice relied upon in case the original electronic advice disappears.

    Rather than getting heavy handed with employees who are not vaccinated, it is likely to be more practical to look at alternative ways of maintaining health and safety such as continued home working, social distancing, screens, PPE etc.

    A policy on vaccination can be a useful tool to set out the organisation's stance and explain the role of and expectations on managers, HR and employees. Health and safety risk assessments should also include alternative safety measures to receiving the vaccine (for example the continued use of PPE).

    Posted February 2021

    Disciplinary hearing pitfalls

    Often employees raise new points in disciplinary or appeal hearings which need to be investigated. The disciplinary/appeal manager needs to take care how they react to this. Of course, the new point should be investigated. But who should carry out the investigation? And what happens to the new information which it produces?

    It is not the role of the disciplinary decision maker or the appeal manager to conduct this further investigation. Further investigation should be undertaken by the investigation manager.

    Crucially, a copy of the outcome of the investigation (usually meeting notes or a new witness statement) should then be sent to the employee so they are given the opportunity to comment on it. This could be at a reconvened the disciplinary hearing, or it may be sufficient to give the employee the chance to write in with any comments. Then, the new evidence and the employee’s comments should be given to the disciplinary decision maker/appeal manager to take into account when making their decision.

    If this process is not followed, the employee may claim that they would have made some key new argument in their defence if they had only seen the new evidence, and that this would have changed the decision made. Even if this is not true, there may still technically be an unfair dismissal.

    When investigating disciplinary proceedings, some employers adopt the practice of having the investigation manager draw up an investigation report. This report usually summarises the evidence. Often, the investigating manager will also include their conclusion on whether or not the employee is guilty of misconduct. This practice was highlighted in the case of Drosfield v University of Reading.

    There is nothing wrong in principle with putting together an investigation report as long as it fairly reflects the evidence collected and both the disciplinary decision manager and the employee are given the same documents relating to the investigation. However, I would not encourage this practice as it can provoke debates, which I have seen in employment tribunal hearings, about whether or not the summary in the report is fair. It seems far more straightforward and risk free to just put together the witness statements and any relevant documents and leave them to speak for themselves.

    If the employer does use the report option, the ACAS guide on disciplinary proceedings makes clear that the investigator should restrict their comments to recommendations on whether the employer should take disciplinary action. The investigator should not suggest possible sanctions or prejudge the outcome of the disciplinary hearing.

    Posted March 2020

    What should an employer do about workplace relationships (if anything)?

    McDonalds has fired its chief executive for having a relationship with an employee. But workplace relationships are common. A lot of people meet their partner at work (I did!). Does this set a precedent for how employers should react?

    Having a relationship with a colleague is not normally grounds for dismissal. But the position may be different if the organisation has put in place a policy banning relationships with colleagues or making them reportable, and the employee fails to disclose it. As I explain below, employers need to approach these policies with caution.

    Having a workplace policy on relationships is valid because of the potential downsides to office romances. They can cause disruption when the two staff members want to take holiday together. If one person is more senior, there is a risk that they will abuse their position to influence decisions on assessments, pay reviews and promotions, or be thought to do so. The fallout from relationship breakdowns is another risk with the possibility of personal friction and retaliatory treatment. Unwanted advances can result in harassment complaints.

    It is unusual for personal relationship policies to ban relationships altogether. A ban is likely to be unworkable. A dating policy should ban inappropriate or sexual conduct in the workplace and cover scenarios where there is an imbalance of power between the parties. It should guarantee that staff privacy will be respected provided work is not adversely affected.

    A clause in the policy requiring staff to disclose relationships is difficult to enforce and it may be in breach of employees’ rights to privacy under the European Convention on Human Rights. If the organisation wants to introduce this, it should set out what sort of relationships are disclosable in a way which strikes a balance between protecting business interests and respecting privacy.

    Employers may be tempted to introduce a rule that couples may not work together. However, this risks claims of discrimination. In Chief Constable of Bedfordshire v Graham, a police officer’s appointment to the same division as her husband was rescinded because of concerns about the risks arising from the relationship. This was held to be indirect sex and marital status discrimination which was not justified and also direct discrimination on grounds of marital status.

    Posted November 2019

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